2022 (6) TMI 875 - HC - Companies Law

Court orders prompt consideration of directorship cessation form under Companies Act, 2013

The court granted the Writ of Mandamus, directing the Registrar of Companies to consider the Form DIR-12 for cessation of directorship under Section ... Cessation of directorship of the 3rd respondent - seeking approval of e-Form DIR-12 filed by the petitioner - Section 167(1)(b) of Companies Act, 2013 - HELD THAT:- As per the provisions of the Companies Act 2013 and the Companies (Appointment and Qualifications of Directors) Rules, 2014, every company, whether new or existing is required to file an e-Form DIR-12 with particulars of its directors and key managerial personnel of the company with the Registrar, within 30 days from the date of appointment/resignation and of any change taking place in their designations. This court is of the opinion that mere pendency of such complaints shall not be a ground to hold the processing/acceptance of Form DIR-12 filed by the petitioner for cessation of directorship of 3rd respondent and the inaction on the part of the R1/Registrar of Companies by withholding processing/accepting the DIR-12 was arbitrary and unreasonable. Due to the inaction on the part of the 1st respondent, the petitioner company was given ACTIVE Non Compliance status for no fault of them leading to imposition of huge penalties and crippling difficulties - The non registration of cessation of directorship of 3rd respondent by way of Form DIR-12 by the Registrar of the Companies was in contravention of the provisions of Section 398 of the Companies Act, 2013. The word ‘shall’ used in Section 398 (1)(f) of the Companies Act, 2013 denotes that, it is mandatory for the Registrar of Companies to register, process and accept such forms. Filing of Form DIR- 12 was procedural in nature and the same was done pursuant to appointment or cessation or change in designation of a director. The petitioner company, through its Board of Directors and Shareholders was well within its rights to appoint new directors or to confirm the Additional Director as Directors as per the applicable provisions of Companies Act, 2013 - it is considered fit to dispose of the writ petition directing the 1st respondent i.e., Registrar of Companies to consider the Form DIR-12 submitted by the petitioner company, if it is in accordance with law. Petition disposed off. Issues:1. Approval of e-Form DIR-12 for cessation of directorship under Section 167(1)(b) of Companies Act, 2013.2. Delay in processing the e-Form leading to non-compliance and penalties.3. Dispute between parties affecting the processing of the form.4. Legal obligations of Registrar of Companies regarding registration of documents in electronic form.Issue 1: Approval of e-Form DIR-12The petitioner sought a Writ of Mandamus to direct the 1st respondent to approve the e-Form DIR-12 for cessation of directorship under Section 167(1)(b) of Companies Act, 2013. The petitioner submitted the form due to the 3rd respondent's absence from board meetings. The form was not processed, leading to non-compliance and difficulties in statutory filings. The petitioner exhausted all remedies, including complaints to relevant authorities, before filing the writ petition.Issue 2: Delay and Non-ComplianceThe delay in processing the e-Form DIR-12 caused non-compliance issues for the petitioner, resulting in penalties and an ACTIVE Non-Compliance status. The petitioner's inability to file required forms for director appointments and removals due to the pending status of DIR-12 led to operational difficulties and reputational damage. Despite efforts to notify authorities and seek resolution, no action was taken, exacerbating the petitioner's challenges.Issue 3: Dispute Impacting Form ProcessingThe respondent cited ongoing litigations and complaints by another individual as reasons for withholding approval of the form. The private dispute between parties and pending legal matters were presented as grounds for delaying the processing of the form. The court noted that mere pendency of complaints should not hinder the processing of the petitioner's form, emphasizing the arbitrary nature of the delay.Issue 4: Legal Obligations of Registrar of CompaniesSection 398(f) of the Companies Act, 2013 mandates the Registrar of Companies to register documents in electronic form, including changes in directorship. The court emphasized the mandatory nature of this provision, stating that the Registrar must process and accept such forms promptly. Withholding the DIR-12 form due to disputes between individuals was deemed impermissible, as it infringed upon the petitioner's rights under the Companies Act, 2013.In conclusion, the court disposed of the writ petition directing the Registrar of Companies to consider the Form DIR-12 submitted by the petitioner if compliant with the law, highlighting the Registrar's obligation to process such forms promptly.